Third Wave Coffees and Maya Farmers in Guatemala

$500 a pound coffee? Yes, the very best coffees these days are selling for astronomical prices. The $500/lb lot (from El Injerto in Guatemala) was a record, but the Wall Street Journal recently reported on the rising auction prices for so-called Third Wave coffees:

Commodity coffee prices are set by the New York C Price (which, today, is around $187 per hundredweight). But market demand is increasing for the highest quality coffees, those scoring in the upper 80s and above 90 on a 100 point cupping chart. And prices for these beans are rising fast.

Yet, The Guardian says of these new craft brews: "it's pricey, but farmers aren't getting rich." Guatemala is ground zero for the Third Wave coffee boom, and while it is true that farmers aren't getting rich, research Bart Victor and I are conducting shows that these mostly Maya small holding farmers have benefited from the market boom--and have high hopes for coffee. In my new book The Good Life, I look at the lives of these coffee farmers

Still the market is imperfect, and small farmers growing quality coffee often have a hard time selling it as such (rather than to middlemen, who mix it with undifferentiated lots). As The Guardian article reports, "those hoping to change these industries are betting on a mix of direct relationships between farmers and manufacturers, and new business models that help to distance specialty products from commodity prices."

The Political Economy of Malnutrition

Almost half of Guatemalan children under five are malnourished, the vast majority rural Maya kids. This is a hidden human tragedy of epic proportions, each of these lives stunted - corporeally and figuratively - just as they are getting started. While we should not reduce this to just economic impact, it is nonetheless significant that the World Bank estimates that chronic malnutrition costs Guatemala hundred of millions of dollars a year in lost GDP. (See this recent PBS Newshour report that features Roger Thurow.)

Yet Guatemala is not a poor country. The GDP per capita of about $4000 may seem low, but worldwide it puts the country at the lower end of "middle income countries." Guatemala does have a very high gini index of inequality, and by any measure rural Maya peoples are the most disadvantaged. Such structural conditions directly affect health and nutrition, what Paul Farmer calls structural violence. Jonathan Metzl advocates for what he terms structural competency in clinical interventions, which calls on an ethnographic sensibility to understand root causes and larger contexts.       

In Guatemala, efforts led by Dr. Peter Rohloff through Wuqu' Kawoq have taken a holistic approach to understanding malnutrition. In a new paper in Maternal and Child Nutrition, Rohloff and colleagues find that mothers often lack autonomy in making food decisions and that stunting is not recognized as such when it is the norm for the community. Most surprisingly, they find that land ownership, even among upwardly mobile farmers growing broccoli and other crops for export, is not correlated with a drop in childhood chronic malnutrition. In the vein of Farmer and Metzl, understanding the full context here certainly includes the political economic structures but also, crucially, the dynamic trajectories of cultural change, including the appeal of junk food. 

In the Wall Street Journal, Matt Ridley argues that one of the smartest forms of foreign aid is in malnutrition prevention and treatment: for every $1 invested in malnutrition, $59 in societal benefits are produced.  One of the best investments in Guatemala, then, is Mani+: see what we are doing about malnutrition through the Mani+ project at www.maniplus.org .

High-end Coffee and Maya Farmers in Guatemala

As with fine wine, provenance and terroir have become key elements of value in the world of high-end coffee. Like wine, coffee’s complex flavor profile is especially sensitive to climate, moisture, and soil conditions; and the highest priced coffees are varietals provenanced from single estates. In 2012, Korean buyers paid $500.50 a pound for a micro-lot of that year’s mocha varietal from the Guatemalan finca El Injerto (bought by YT Infinite, doing business as Brian's coffee). The entire lot was only 8 pounds, but the benchmark New York commodity price at the time was just about $170 per hundredweight, meaning that the El Injerto mocha sold for almost 300 times the going rate for washed arabicas.

I did not try this $500 coffee, but I have sampled a number of El Injerto’s more reasonable (if still pricey) alternatives. They produce my favorite coffee by far, with a deep, almost smoky, base and highlights of dark berries and citrus. Tastes vary, but by El Injerto holds its own with the very best. The owner of El Injerto, Arturo Aguirres, told me that until the late 1970s, they transported all of their coffee by mule, as they were no passable roads, and they he continued to plant the high altitude exotic varietals (Mocha, Pacamara, Maroquipe) even when they were not selling, because they were good coffees and he took pride in his coffee production. When others were switching their land to rubber and palm trees, Aguirres held out. And now it is paying off with the premiums his specialty coffees command. (See also Allison Aubrey's NPR piece on Journey of a Specialty Coffee Bean from Cherry to Cup.)

Are his coffees worth $6.60 a cup wholesale (and FOB Huehuetenango, Guatemala)? If it is what the market will bear, one could argue, then it seems that they must be. "Objective" quality (by established tasting standards) and market scarcity play an important role, but we cannot discount the symbolic values at play: the relative positioning of conspicuous consumption; the imagined, personal relationship with a producer (and his inspiring story); and underwriting it all, the cultural and market shift among the global affluent toward artisanal and singular products.  Yesterday, the NY Times reports on the consumption side of such coffees at high-end retailers such as Stumptown and Intelligensia. 

Throughout the twentieth century, coffee production in Guatemala was a highly concentrated industry composed of a small number of very large producers. These cafetaleros operated privately owned plantations (fincas) and depended on temporary, migrant labor to deliver what had become a high volume, low cost commodity product. The large producers traded with equally large and concentrated exporters and roasters who then completed the global value chain; this was the coffee that found its way into cups around the world as Folgers, Maxwell House, and hundreds of other brands. In the largely Maya highland communities where labor was recruited, working on coffee fincas was, and is, seen as employment of last resort because of the low wages and harsh conditions.

Today, we find a large number of former coffee laborers and subsistence farmers supporting their families by growing and selling their own coffee. The rapidly proliferating number of small producers—at least 50,000 new growers over the last 20 years, doubling the number of producers in Guatemala—has significantly altered the face of Guatemalan coffee. In the western highlands, the vast majority of these new producers are indigenous. They are cultivating increasingly differentiated varieties of high quality coffee on their own small parcels of land using family labor, and increasingly hiring day workers; a majority process and sell their coffee through a cooperative. Their production is sometimes sold as domain-specific varietals directly to small and medium sized roasters around the world rather than disappearing in vast, undifferentiated lots of commodity.

In a recent study, Bart Victor and I look at how coffee plays into the desires of Maya farmers for a better life.  Aguirres is not typical of the group—a ladino, relatively affluent, a third generation coffee farmer—but the prices his provenanced coffee commands dramatically illustrate the high end of this new market, and the potential for other farmers. El Injerto operates at the very upper end of the market, but the demand for quality and provenance has driven up prices for all of the high altitude Guatemalan producers, most of whom are today relatively smallholding Maya farmers.

There is dignity, many of these farmers told us, in working one’s own land, being one’s own boss, and they see coffee as a potentially lucrative way to keep their own production and be finically independent. They view seasonal plantation labor as a form of dependency, wrought with the hardships of being separated from one’s family, that they want to avoid if at all possible. They also prefer to hold wealth in land, and see coffee production as a way of expanding land holdings (or first time buying). The farmers we interviewed overwhelmingly want to get ahead, to achieve algo más in their lives, to see their children flourish, and they see coffee as a partial route to that. See Jennifer Johnston's piece on Consumer taste for high altitude beans shifts opportunity to small farmers.


We did our study in 2011, right after the March 31 peak New York C price of $298.93 (per hundredweight); two years later it has fallen to $135.43 (see price chart below).  At the same time the Coffee Rust fungus threatens large portions of Guatemalan production (estimates range from a drop of 15% to as high as 50% next year).  Price drops and coffee rust are certainly hitting the new entrant smallholders the hardest, and Bart and I hope to do follow up studies over the next year to see what impact this has had and farmers' livelihoods.